What is it about?

The aim of this study is to empirically examine firm-specific factors that influence the financing decisions of companies listed on BSE-500 index. Firm-specific variables such as profitability, company size, growth potential, liquidity, non-debt tax shields, age and tangibility were evaluated in this study.

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Why is it important?

This study helps to better understand how firm-specific factors play a vital part in deciding the capital structure of businesses and makes a significant contribution to the literature. Thus, the present study examines the drivers of the capital structure among sample Indian companies, which allow firm managers and regulators to recognise relevant variables that optimise performance. This study is limited to Indian companies and only firm-specific variables were considered.

Perspectives

The current research focuses on the impact of firm-specific variables upon the financing decisions of Indian companies. In the background of developed countries, numerous studies in this field have been carried out. In the Indian context, however, there are not many researches in this area. However, the existing studies use one or two ordinary least square (OLS) models, resulting in a lack of thorough research and robust results. To address this gap in the analysis, the current study used four models and used a 15-year time frame, as well as a bigger sample size, which was not used in earlier investigations.

Mohit Pathak
Symbiosis International University

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This page is a summary of: The nexus between capital structure and firm-specific factors: evidence from Indian companies, Journal of Economic and Administrative Sciences, July 2021, Emerald, DOI: 10.1108/jeas-02-2021-0028.
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